The EUDR is not just a guideline—it demands concrete actions to ensure compliance and reshape how commodities are sourced and verified.
Adjusting your supply chain practices to meet these legal requirements can present challenges, from sourcing data to ensuring supplier cooperation. But with the right tools and systems, you can take proactive steps to meet EUDR obligations while reducing risks.
In the following sections, we will explore what it means for companies to build deforestation-free supply chains and the specific due diligence responsibilities they must fulfill to meet these legal requirements.
The Legal Requirements and Due Diligence for Deforestation-Free Supply Chains
Under the EUDR, operators and traders must demonstrate that their products are deforestation-free. This applies to products that contain or are made using high-risk commodities like cattle, soy, palm oil, and timber, which must be sourced from land that has not experienced deforestation since the cut-off date, December 31, 2020.
To ensure compliance, companies are required to implement due diligence systems that actively monitor and manage their supply chains. These systems must include data collection, verification, risk assessment and risk mitigation processes to confirm compliance with sustainability standards.
Key actions for due diligence include:
- Information Gathering (Art. 9)
Companies must collect comprehensive information about the products in their supply chain, including:some text- Geolocation data: Accurate geolocation data of production areas to ensure the land was not subject to deforestation post-December 31, 2020.
- Product Descriptions: Including trade names, scientific names of species (if applicable), and relevant quantities.
- Supply Chain Documentation: Invoices, contracts, customs forms, and shipping records to verify product traceability and legal sourcing.
Read also: A Comprehensive Guide to Mastering EUDR Geolocation Data Collection
- Risk Assessment (Art. 10)
Businesses are required to evaluate potential non-compliance risks for commodities based on:some text- Country-specific deforestation risks.
- The complexity and transparency of the supply chain.
- Evidence from geolocation data or previous supplier compliance records.
If significant risks are identified, enhanced scrutiny and measures must follow.
- Risk Mitigation (Art. 11)
Operators must address risks identified during the risk assessment proactively by implementing measures such as:some text- Supplier Engagement: Ensuring suppliers adhere to compliance requirements through contracts or certifications.
- Corrective Actions: Where necessary, replace or rectify non-compliant suppliers.
- Third-Party Verification: Use audits or independent assessments to validate compliance.
- Due Diligence Statement Submission (Art. 12)
Companies must submit an official due diligence statement to the EU Information System affirming compliance. This statement confirms:some text- The absence of deforestation-related risks for the relevant commodities.
- Compliance with the legal standards of the country of production.
- Ongoing Monitoring (Best Practice)
Though not mandated, implementing continuous monitoring through tools like satellite imagery or AI-driven platforms can help ensure long-term compliance and early risk detection.
Identifying Affected Parties in the Supply Chain
The EUDR explicitly defines the obligations of operators and traders, ensuring that accountability is maintained across the supply chain. The below obligations are aligned with Articles 4 and 5 of the Regulation, which establish distinct roles and responsibilities.
Operators: First to Place Products on the EU Market
Definition: Operators are entities that place relevant commodities or products on the EU market for the first time, whether through production or import, or exports them.
Key Obligations (Art. 4):
- Due Diligence System Implementation: Operators must establish and maintain a robust due diligence system, which includes:some text
- Gathering comprehensive information about the product's origin, geolocation, and legality.
- Assessing and mitigating risks associated with deforestation and forest degradation.
- Submission of a Due Diligence Statement: A mandatory declaration to the EU Information System confirming compliance with deforestation-free requirements and the legislation of the country of production.
- Mitigation Measures: If risks are identified, operators must implement appropriate measures to reduce them to a negligible level before placing the products on the market.
SME-Operators: Small Enterprises with Defined Responsibilities
Definition: SME operators are small and medium-sized enterprises that place relevant commodities or products on the EU market for the first timeor export them. While their obligations under the EUDR are reduced compared to larger operators, they remain accountable for ensuring compliance.
Key Obligations (Art. 4):
- Streamlined Due Diligence: SME operators are exempt from conducting full due diligence on products already verified within the supply chain. Instead, they must reference the original due diligence statement when requested.
- Full Compliance for New Products: For products not yet subject to due diligence, SME operators must establish a due diligence system to ensure deforestation-free compliance.
- Documentation and Records: They must maintain and provide documentation to competent authorities upon request, ensuring traceability and transparency.
Traders: Distributors Within the EU Market
Definition: Traders are entities that make relevant products available on the EU market but do not place them there initially.
Key Obligations (Art. 5):
- Enhanced Responsibilities for Non-SMEs: Larger traders (non-SMEs) are required to exercise due diligence similar to operators, ensuring that the products they distribute comply with the EUDR.
- Information Maintenance: Traders must keep records of their suppliers and buyers to ensure product traceability.
- Collaboration with Authorities: Traders must make their records available to competent authorities upon request for inspections or audits.
Read also: Understanding EUDR Penalties: 10 Business Implications of Non-Compliance
SME-Traders: Small Distributors Supporting Transparency
Definition: SME traders are small and medium-sized enterprises that make relevant products available within the EU market but do not place them there initially. Their role focuses on maintaining traceability and assisting in ensuring compliance with EUDR requirements.
Key Obligations (Art. 5):
- Record Keeping: SME traders must maintain detailed records of their suppliers and buyers, ensuring that products remain traceable throughout the supply chain.
- Responsiveness to Authorities: While exempt from conducting due diligence, SME traders must ensure they have access to the necessary compliance documentation, such as due diligence statements, and provide these to competent authorities when required.
- Risk Reporting: If any indications of non-compliance arise, SME traders are obligated to report this information to the relevant authorities, contributing to the integrity of the supply chain.
Producers and Suppliers Outside the EU
Producers and suppliers outside the EU who do not place products directly on the EU market must be considered suppliers who have no direct legal obligations under the EUDR.
However, it is in their interest to align with EUDR standards, as their buyers—operators and traders—will require EUDR-compliant products to fulfill their own regulatory obligations.
Operators and traders are also dependent on information from suppliers to comply with their own due diligence requirements. By proactively ensuring compliance, producers and suppliers can strengthen their business relationships and streamline the supply chain’s compliance efforts.
While intermediaries such as logistics providers, consultants, or third-party auditors play a supportive role in compliance-related tasks like documentation collection and risk assessments, the EUDR does not formally recognize them as a separate category with specific obligations.
Their contributions, such as assisting operators and traders with geolocation data or audits, are valuable but remain part of the broader compliance support network, not a regulatory requirement.
Read also: How to Comply with EUDR Requirements Using Your Existing Supply Chain Systems
EUDR Compliance with TradeAware and CMS
TradeAware offers a comprehensive monitoring platform designed to help businesses meet their EUDR due diligence requirements. By joining forces with CMS, a leading legal firm, LiveEO combines its the advanced satellite technology with CMS's legal expertise, streamlining EUDR compliance processes from data collection to risk mitigation.
Introduction to CMS
CMS is a prominent legal firm renowned for its environmental regulation expertise. With over 100 professionals operating across multiple countries, CMS provides an extensive support network to address the compliance needs of businesses. Their mission is to prepare companies for the transformative requirements of the EUDR.
Key Services of CMS:
- Supplier Checks: CMS ensures supplier EUDR compliance through thorough document reviews, risk assessments, and actionable recommendations.
- Legal Training: Through webinars and personalized sessions, CMS educates businesses on meeting EUDR obligations.
- Compliance Advisory: CMS advises on process adaptations to help businesses meet EUDR regulatory demands.
- Due Diligence Implementation: CMS supports the establishment of effective due diligence systems tailored to EUDR standards.
By leveraging this partnership, companies choosing TradeAware for EUDR compliance gain access to:
- Geospatial Monitoring: LiveEO’s satellite technology underpins TradeAware's ability to verify deforestation-free production areas in real time.
- Legal Compliance Layer: CMS enriches TradeAware by conducting legal reviews, ensuring all due diligence requirements, including risk mitigation, are met.
- Streamlined Compliance Process: TradeAware facilitates compliance with tools for uploading geolocation data, assigning supplier documentation tasks, and generating due diligence statements.Together, CMS and LiveEO provide a comprehensive solution, addressing both legal and operational aspects of deforestation risk management.
Together, CMS and LiveEO provide a comprehensive solution, addressing both legal and operational aspects of deforestation risk management. Contact us today to learn how TradeAware can transform your EUDR compliance.
This article is Part 2 of the series. Be sure to explore the other articles for a complete understanding of the EUDR and how to ensure your supply chain meets its stringent standards.
